A terrible hurricane strikes Japan, flooding a beachfront industrial area. As huge pumps siphon the floodwaters back into the sea, reporter Ichiro Sakai and his photographer Yoka arrive. Sakai gives Yoka orders to start taking pictures to go with his articles. Sakai soon finds himself confronted by an irate politician who takes offense to Sakai's negative articles about the rebuilding efforts. Sakai leaves the politician to blather to his hangers-on, looking for Yoka. He finds her still setting up for her first shot. Angrily telling her that this is not art, Sakai looks at her subject, a weird silvery object floating amidst the debris. Puzzled, Sakai retrieves the strange piece of flotsam.
At the news office, editor Maruta takes a phone call, a report of a monster egg floating off Karada Beach. At Karada Beach, the fishermen are frightened by the huge egg, but the urging of their village elder and a Shinto priest's assurance that his prayers will protect them from any monster's curse, convince the fishermen to set out in their boats and claim the egg. Soon, the egg has been dragged onto the beach and news of it excites all of Japan.
Professor Miura and a team of scientists are examining the egg when Sakai and Yoka arrive. The Professor has no idea what the egg might be as yet. Miura warms to the two, despite Yoka's flash bulbs. Just then, the scientists are told to leave the egg alone by Kumayama. Kumayama represents Happy Enterprises, which has bought the egg from the fishing village for the equivalent price of 150,000 chicken eggs. Kumayama plans to exhibit the egg, and scientists can examine it, if they pay just like the public. Kumayama asks Yoka to take his picture, blowing cigarette smoke in her camera just as she snaps the picture.
That night, Miura, Sakai and Yoka are in the nearby hotel. Yoka grumbles about Kumayama's brutish behavior, Sakai chiding her for being unprofessional. Sakai says he will support Miura if he goes to the authorities to contest ownership of the egg. As the trio is leaving the hotel, Sakai sees Kumayama at the desk. Kumayama asks if a Mr. Torahata is in. Told he is, Kumayama goes up to the man's room. Sakai follows the man, suspecting that someone else may be in charge of Happy Enterprises.
In Torahata's room, Kumayama tells Torahata that Happy Enterprises now owns the egg. Torahata laughs at Kumayama's estimate of a 5 million-yen profit, saying the egg will net at least a billion in profit. He shows Kumayama plans for a giant incubator to house the egg and how they will go about charging the public to see it. At that moment, two voices declare that the men's plans are wrong. Fearing spies are in the room, Torahata goes to lock the plans in his safe, which is crammed with stacks of money.
The Shobijin appear on the fireplace mantel, pleading with Kumayama and Torahata to return the egg. The two men surround them, trying to catch the fairies. Hearing the sounds of Kumayama and Torahata scrambling about the room chasing the fairies, Sakai bursts in, saying he thought there was a fight. Torahata angrily orders the reporter out, then returns to looking for the Shobijin.
Sakai meets outside with Yoka and Miura, telling them he has learned that Torahata is the man financing Kumayama. Jiro Torahata is a notorious money-man and exploiter of entrepreneurs. Suddenly, the voices of the Shobijin address the trio. Perched on a tree branch, the fairies explain the situation. The egg belongs to Mothra, it was washed away by the hurricane. The natives of Infant Island pray for the egg's return continuously. Miura explains that Kumayama owns the egg. The Shobijin announce that Kumayama and Torahata tried to murder them when they went to see the men. Miura asks what will happen if the egg is not returned. The fairies explain that eventually a larva will hatch and swim back to the island, but not before inadvertently causing great damage. The humans agree to help. The fairies thank them and say that Mothra thanks them also. Through the trees, the huge monster can be seen, resting in a field.
The huge incubator is built. Sakai, Yoka and Miura plead with Kumayama and Torahata to give up their scheme. Torahata claims that Kumayama owns the egg, even if it was his money that financed its purchase. Kumayama still refuses to change his position. Sakai says that Mothra, the Thing, is the real owner of the egg. Torahata laughs and asks to see the power of attorney given to them by Mothra. Sakai opens an ornate box, revealing the Shobijin. The two villains try to buy the fairies. Disgusted, Sakai, Yoka and Miura pick up the fairies and leave.
In a restaurant, Yoka tries to reassure the Shobijin that they should not give up hope. Sakai and Miura are more practical, realizing how hard it will be to contest the ownership. The Shobijin leave, saying goodbye as Mothra lifts into the air, flying them back to Infant Island.
The Happy Enterprises project proceeds. The fishermen demand money for the egg from Kumayama despite the contract that specifies the money will be paid out on opening day. Reluctantly, Kumayama agrees to pay them the rest. Kumayama asks Torahata to cover the expense, but Torahata refuses, until Kumayama agrees to a loan, with Kumayama's stock in Happy Enterprises as collateral.
Sakai grouses to his editor about the ineffectiveness of his articles to stop Happy Enterprises. The editor sends another reporter, Jiro Nakamura to cover the giant egg story. Just then, Yoka arrives, saying that Professor Miura needs to see her and Sakai. Sakai and Yoka arrive at Miura's lab, where he puts them through a steam bath. Miura explains that the two were radioactive. The object from Karada Beach is radioactive also, although he still doesn't know what it is.
The group travels to the now dry flood region, but Miura can find no trace of radioactivity. The politician arrives, trying to interest Sakai in all the progress the draining has made. Finding out about radiation, the politician orders Sakai and Miura's people to leave at once. Sakai goes to collect Yoka, who is again setting up a shot. She claims to be unable to focus because the land keeps moving. Sakai soon sees what she is talking about.
The ground buckles and churns, the muddy sand showing radioactivity. The observers flee as a huge tail erupts from the mud. Shaking sand from his back, Godzilla emerges from the drained beach. The strange object was a chip from one of Godzilla's dorsal plates. Godzilla heads toward Nagoya. Even as evacuation begins, the monster stomps into the city, turning an oil field into an inferno with his atomic breath. The monster heads deeper into the city, even destroying the ancient Nagoya Castle in his wrath.
At a meeting of military leaders, the United States announces that they will help the Japanese by employing the newly developed Frontier Missile against Godzilla. It is decided that the US Navy will attack Godzilla on the beach, to spare population centers. Meanwhile, the JSDF will try to hold a defensive perimeter around Nagoya. The American fleet attacks Godzilla as night begins to set. The Frontier Missiles are launched, plowing into the beach around Godzilla, finally engulfing the monster in a tremendous explosion. Smoke obscures the beach, but when it clears, the Navy admiral sees the unthinkable, Godzilla lives.
Editor Murata talks with Sakai and Miura about what will be done to stop Godzilla. Jiro arrives from Karada Beach and joins the conversation, saying that perhaps Mothra could stop Godzilla. The idea is seized upon by Murata, but Jiro's request for a raise is met with an angry statement that Jiro deserted his post, he was to stay with the egg.
The editor impresses on Sakai, Yoka and Miura that they must try to convince the fairies to get Mothra to fight Godzilla. The trio agrees to try and soon are on a plane bound for Infant Island. The Japanese are soon met by natives, who escort them through the atomic desolation of the island to their cavern temple. The visitors are made to drink the mystical liquid that protects the islanders from the radiation. The native chief parlays with them, angry about the atomic tests and the refusal to restore Mothra's egg. The islanders will not help. The singing of the fairies leads Sakai, Yoka, and Miura to the isolated fertile area of Infant Island. The fairies are friendly, but they must agree with the islanders, because the egg was not returned, they cannot help.
Yoka pleads, saying that Godzilla is killing good men along with evil. Sakai takes up her tone, saying that they are all a part of the brotherhood of man, that if they refuse, the islanders are abandoning their brothers. Mothra's cry interrupts Sakai's speech, astounding everyone. The fairies lead the visitors to Mothra's cavern shrine. They tell the Japanese that Mothra has agreed to help them. Mothra is old, however, and about to die. If she goes, she will not have the power to return. It will not be the end, however, for when the egg hatches, Mothra will be reborn.
The commander of the Japanese defense forces discusses plans to destroy Godzilla with reporters. The JSDF intends to confine Godzilla in an area where engineers hope to generate artificial lightning. If this fails, Godzilla will be driven to a second unit, which will drop metal nets on the monster to better conduct the electricity.
The series of electrical towers are hastily erected as Godzilla battles tank divisions nearby. The tanks can barely slow the monster with their attack. Sakai, Yoka, and Miura arrive at Happy Enterprises anticipating Mothra's arrival. They are surprised to find Jiro still at the site, despite Godzilla's advance. Jiro explains that he is more afraid of the editor than Godzilla. He also reports that Kumayama fled when Godzilla started to attack.
Kumayama appears at the hotel as Torahata calmly prepares to leave. Kumayama angrily confronts Torahata, who has cost Kumayama his fortune and forced the man to borrow his own money, at interest. Kumayama attacks Torahata, demanding his money back. Beating Torahata bloody, Kumayama scrambles to the safe and begins removing money from it. Torahata rises and sees Godzilla through the window. Terrified, he grabs a pistol from his desk. Coming to his senses, Torahata uses the gun not on Godzilla but on Kumayama. Torahata gathers up the money and tries to escape the hotel, but it is too late. Godzilla destroys the hotel, the rubble crushing Torahata as he tries to flee.
Godzilla approaches Happy Enterprises and the incubator. He glares at the egg and batters the incubator with his tail, smashing the structure open. Just then, Mothra arrives. Mothra hovers overhead, trying to draw Godzilla away from the egg and depositing the fairies near Sakai and Miura. Mothra uses her wings and the powerful winds they generate to knock Godzilla down. The reptile resists and Mothra is forced to grab his tail and pull Godzilla away from her egg. Mothra drags Godzilla away, but Godzilla soon breaks free. The frenzied battle progresses until Mothra employs her poisonous powder upon Godzilla, enveloping him in a yellow fog. Godzilla proves resistant to the poison and repeatedly blasts Mothra with his atomic breath. Mothra breaks away from the combat. She flies over to the egg, covering it with her wing as the life fades from her body.
With Mothra defeated, Sakai's police escort flees, accidentally taking Jiro with them. The fairies announce to their friends that they will be safe by the egg, as it will hatch today.
Godzilla heads away, his path approaching the defense forces. Jet fighters and tanks attack their monstrous target. Napalm bombs scorch the landscape and even succeed in setting fire to Godzilla's reptilian hide. But nothing can stop the monster. The JSDF commander orders the current to the electrical towers activated. Artificial lightning strikes Godzilla, but the monster still does not seem fazed, crushing the towers in his fury.
Back on the beach, the fairies sing to hatch Mothra's egg, even as the far away Infant Islanders pray as well.
Godzilla enters the second area of defense. Helicopters drop heavy metal nets on the monster as tanks and bombers harass the reptile. A second series of towers are activated, again blasting Godzilla with artificial lightning. Godzilla cries out in pain and rage as the attack wears him down, thrashing about in agony. But the towers cannot maintain the extreme current needed to kill Godzilla. They short out and as soon as the current is gone, Godzilla reduces them to molten wreckage as he plays his atomic breath across his attackers.
A small seaside village evacuates, a school principal begging anyone to help him rescue a group of children on a small isolated island. As he explains, it is evident that there is no time, Godzilla appears behind the village. The giant monster stomps forward into the village, destroying it, and swims toward the nearby island.
The fairies continue to sing and pray. The egg glows with power and breaks open. From the egg emerges not one but two monstrous caterpillars. The two Mothra larvae set out to find the killer of their parent, swimming toward Godzilla. Jiro returns in a police jeep, driving the heroes to the shattered village, explaining that Godzilla is heading for Iwo Island. They find the injured principal and secure a boat, determined to rescue the children.
Faced with Godzilla's advance, the children and their teachers flee into a cavern system. Godzilla stomps across the island, destroying all in his path. He pays little attention to the Mothra larvae, warning them off with a display of his atomic breath. The two Mothras manage to surround Godzilla in a canyon. One caterpillar begins the attack, biting Godzilla's tail. Godzilla savagely whips the larva about; trying to free his tail of the insect's clenched jaws. The other larva lures Godzilla away from its sibling by spraying silk at him, retreating behind boulders when Godzilla responds with his radioactive fire. Soon, both caterpillars begin spraying silk on Godzilla, taking cover when he tries to blast them with his flame.
Sakai, Miura and the others arrive to rescue the children from their cave sanctuary, leading them down to the boat. Meanwhile, Godzilla lashes out furiously at the Mothras, but is unable to hit them. The Mothras continue to cover Godzilla in a shroud of silk. Finally, covered from head to foot in the restrictive substance, Godzilla topples into the sea. The Mothras cry triumphantly. The heroes return the children to the villagers and watch from a cliff as the two Mothras swim away, returning to Infant Island.